Churchouse: For individuals, the answer is no. These proposals will be considered up to October 22 and have had significant input from the Investment Management Association and it has done some excellent work here.

If these proposals make it to the statute book, they are likely to simplify the tax regime for UK investing and this will be helpful for exempt investors, such as pension funds and charities. Individuals are likely to be unaffected if the proposals remain as they are.

Catt: I have always been sceptical about the advantage of offshore investing. It has minimal effect for basic-rate taxpayers and the charging structures of offshore products often negate the benefits, even for higher-rate taxpayers. As far as I can see, the advantages are more about the ability of funds to invest in wider investment media than tax anyway.

Dampier: The Treasury seems to have decided that an expedient method of regulating offshore funds is by increasing the attraction of investing in UK authorised funds.

Broadly, the proposals make UK-authorised investment funds transparent for UK taxpayers. Income and gains will be taxed on the investor as if he held the underlying assets directly. It should simplify reporting and administration as well as creating a greater taxable revenue stream for the Treasury.

On a tax basis, especially compared with pan-European Ucits, UK-authorised funds should not then be at a disadvantage and may be more competitive on a cost basis.

However, until a commen-surate UK regulatory regime for funds of alternative investment funds is legis-lated for, investors who are attracted by more creative portfolio management techniques such as short-selling and use of derivatives and leverage may still head offshore. The proposals may also have little impact on tax wrappers such as offshore bonds.

Does the failure of HBOS’s rights issue indicate that huge numbers of investors are still wary of financials and are they right to consider it is too early to move back into this sector?

Churchouse: It is difficult to know where to start with the bad news from financials. I also do not think that all the bad news has been released yet. Many have commented that there is more bad news to come and staying away from financials at this time seems a prudent measure, certainly in the shorter term.

This has to be balanced with comment on successful rights issues, such as RBS, which secured significant funding before others having their turn.

Dividend returns and ratios have increased significantly due to the downturn and these will remain attractive to some investors but it does raise the question about their sustainability. Watch this space, I think.

Catt: The volatile market may be offputting to many people. Also, the banking sector is taking quite a big hit because of losses being made writing off debts. People will be looking for stability and confidence in the future direction of the market before they start to come back into the market.

Obviously, the lowest point is the time to maximise investment returns but I am sure that most people would rather sacrifice some of their gain than be exposed to investment volatility.

Dampier: It surely cannot be of any great surprise that investors are wary of financials. Banks’ share prices have been clobbered and, for many, the rights issues must have seemed like throwing more money after bad. Banks have a habit of destroying capital and seem to repeat the same mistakes around every 15 years.

Banks are experiencing a bounce at the moment but I believe this is a dead cat bounce. The trouble is that the UK banks have been hit first by the US problems and now they are being hit by their own housing market. House prices are likely to fall by at least 25 per cent, causing further bad debt provision.

Whether they are cheap enough, God knows, but it looks more like a hero trade as the banks seem to be ex-growth, at least for the next couple of years or so. The share price needs to be very low to compensate for this. Remember, too, that dividends are being hit. There are opportunities elsewhere in the market.

One year on from the start of the credit crunch and there are still no signs of it easing. Where should investors with a cautious outlook consider putting their money?

Churchouse: The short answer is to stay in cash. In my view, deposit rates are artificially high at the present time, which is good news if you maintain a cautious outlook. Looking at immediate investment, there seems to be no hurry to commit to the markets at this time although various invest- ment areas are becoming more attractive.

However, these opportunities come with an additional level of risk at this time and may not meet a cautious investor’s outlook. Gilt and fixed-interest funds may be attractive as a complement to cash holdings or premium bonds, as an example.

Catt: This really depends on how cautious their attitude to investment risk actually is. Many of the historically safe fund types, such as corporate bonds and property, are no longer the safe havens that they were. Also, most of the growth areas are tending to be traditionally higher-risk areas such as emerging markets, Asia, Africa and South America.

For the truly cautious investor, simply shopping around to get the best deposit rate would appear to be most attractive at this time. Then make sure the original rate when the deposit is opened continues to remain competitive, as some institutions have a horrible tendency to have introductory offers that run out without advising customers.

Dampier: The economic news is likely to stay grim for quite some time but is important for investors to realise that the stockmarket will bottom before the economy does.

However, I think it is too early to call a bottom to the market.

It will take time to heal the banking problems although I think the market might hit bottom some time this year.

Cautious investors should consider keeping a substantial amount of money in cash. I would also look at corporate bonds such as M&G optimal, Old Mutual and Artemis strategic. These are offering yields in excess of 7 per cent and I do believe that interest rates will fall next year.

The new breed of absolute funds might also be considered for a cautious investor. Dovetailing the new Cazenove absolute fund with BlackRock UK alpha should work quite well. The managers have diametrically opposed views on commodities and oils, so the correlation on the funds will be quite low.

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For some years now, I have delivered a lecture on the wealth management industry to a group of college students from America. Last week, a couple of dozen of them listened to my opinions on where wealth management was heading and why it was such a dynamic industry.

Royal London has named David Kneeshaw as chief executive of the combined Scottish Life International and Scottish Provident International businesses. Kneeshaw is currently chief executive of Scottish Life International.

As I was preparing to write this column, I suddenly found myself wading through a succession of One Year of the Credit Crunch stories. Some pieces were informative, others entertaining, a few were truly outstanding.

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